Three Accenture consultants recently published an article on the Harvard Business Review's blog. We're relieved to see it hasn't been published in the magazine (so far) because it's a pretty blatant pitch for their services.
HBR.org: Marketers Need to Stop Focusing on Loyalty and Start Thinking About Relevance, 2018-Mar-21 by John Zealley, Robert Wollan and Joshua Bellin
If your customer retention strategy relies on “buying” loyalty with rewards, rebates, or discounts, it is coming at a high cost. And these days, it could also mean that you’re giving up something priceless: your relevance.
That’s because the “loyalty era” of marketing, as we’ve known it, is waning. It was built in part on the notion that consumers will keep buying the same things from you if you have the right incentives. Yet, according to recent consumer research from Kantar Retail, 71% of consumers now claim that loyalty incentive-programs don’t make them loyal at all. Instead, in this new era of digital-based competition and customer control, people are increasingly buying because of a brand’s relevance to their needs in the moment.
We agree that marketers cannot afford to ignore "relevance," and we expect that some marketers go off the rails by focusing too narrowly on incentives to drive retention. Some of our favorite companies seem to be trying to buy our loyalty. (I'm looking at you, Kroger.)
In order to be relevant, we have to BE loyal to our customers. That doesn't mean plastering them with rewards. It means understanding them and working to provide them with the products and services they need. CRM software helps us keep track of our full relationship with a customer, helping everyone in our company see a more rounded picture of the customer. Sometimes we see that customer has "aged out" or otherwise left the market our companies serve. Then our communications ought to turn from encouraging purchases to encouraging advocacy, or perhaps to humanely letting the relationship die.
Accenture has a gimmick to help companies maintain their relevance with customers, by replacing the "four P's of tradition marketing--product, place, price and promotion" with "five P's: purpose, pride, partnership, protection and personalization."
All the P's are useful in context, but none of them has much to do with loyalty. When care about our customers, use our listening skills, and evolve our products and services to improve their relevance and value to the customer, we create a loyal relationship. Which we must work to maintain. P's or no P's.